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business newsCIVETS Watch: No Economic Immunity for Emerging Nations
By
Carol Kopp
Jan 18, 2012 8:50 am
The World Bank cuts 2012 forecasts, and emerging markets show lackluster growth as wealthy nations and consumers trim spending.
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The World Bank cut its 2012 growth forecasts, to 5.4%, from 6.2%, for emerging nations, and to 1.4%, from 2.7%, for high-income nations.
The report said slower growth in global trade and commodity prices is “already visible.” It warned emerging nations to “prepare for further downside risks” from the eurozone troubles, and somewhat slower growth in the largest developing nations.
Meanwhile, a report from HSBC Holdings said its Emerging Markets Index edged higher only fractionally in the fourth quarter of 2011, to 52.2 from 52.0 in the third quarter.
The report attributed most of that result, which it termed “lackluster,” to a slowdown in global trade. It blamed eurozone financial troubles, but also cited political turmoil in the Middle East and higher oil prices as factors.
The slowdown reduced manufacturing activity in emerging nations, most severely in Taiwan and South Korea, according to the report. The services sector in emerging nations climbed, particularly in Brazil and China, though not enough to make up for the cuts in manufacturing.
The report cited India, Russia and Turkey as standout performers in a tough quarter.
More of the same was predicted for 2012, though the report suggests that nations that respond with interest rate cuts and fiscal stimulus will have more “bounceback-ability.”
In a separate report, HSBC predicts that 19 countries now considered emerging nations will be among the world’s 30 largest economies by the year 2050. It sees their emergence as contributing to accelerating world growth. It also sees the U.S. moving to second place, behind China and followed by India.
All of the CIVETS nations except Vietnam made the list of nations predicted to be in the Top 30 economies by 2050. The report predicts the following rankings by 2050: Colombia at 26th place, up 13 places in the rankings; Indonesia at 16th, up five; Egypt at 19th, up 16; Turkey at 12th place, up six; and South Africa at 30th, down two.
The report ranks nations on their current level of development and potential to catch up with more developed nations. The full report is available online.
Web Watch In Brief:
Colombia’s Ecopetrol Seeks Investors Abroad
The Colombian government hopes to interest international investors in buying shares of Ecopetrol SA (EC) as it sells 3% of its majority stake in the oil giant, according to Bloomberg News. The government hopes to raise $3 billion in the sale, with the proceeds to be used to repair infrastructure damage caused by recent severe flooding. Over time, it will sell about 10% of its 88% stake in Ecopetrol.
Disbelief Over Egyptian Tourism Numbers
Egypt’s official tourism ministry has announced that tourist arrivals fell 33% in 2011, to about 9.5 million. But local professionals say the numbers vastly understate the real losses to tourism during Egypt’s year of political upheaval.
The head of a coalition of travel companies even suggested to an Egyptian news site that the government must have counted as tourists “half a million Libyans fleeing war.”
He was right, too. It appears the numbers were compiled from border crossing documents. “What is the problem in considering Libyans tourists?” asked Tourism Minister Mounir Abdel Nour. “They filled hotels in Alexandria during the first half of the year, ate at the city’s restaurants and spent time at its parks; why shouldn’t they be considered tourists?”
Fair enough. But the Libyan refugees apparently didn’t get to Egypt’s main tourist attractions: the ancient monuments along the Nile River, the sights of Cairo, and the modern resorts on the Red Sea.
South African Debt Hit With Negative Outlook
Fitch Ratings changed the outlook on its BBB+ rating for South Africa to negative from stable last week. The move followed a similar change by Moody’s last November. Standard & Poor’s currently has a stable outlook on its own BBB+ rating for South Africa.
South Africa’s Treasury blamed uncertainty in the global economy for the negative change. But Fitch cited the country’s 25% unemployment rate and strain on public finances.
No positions in stocks mentioned.
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